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HomeMy WebLinkAboutAgenda Packet - EVWD Board of Directors - 07/22/2015(Page 3) Page 1 of 59 (Page 10) (Page 17) (Page 22) (Page 32) (Page 42) Page 2 of 59 Page 3 of 59 Page 4 of 59 Page 5 of 59 Page 6 of 59 Page 7 of 59 Page 8 of 59 Page 9 of 59 Page 10 of 59 Page 11 of 59 Page 12 of 59 Page 13 of 59 Page 14 of 59 Page 15 of 59 Page 16 of 59 Page 17 of 59 Page 18 of 59 Page 19 of 59 Page 20 of 59 Page 21 of 59 Page 22 of 59 Page 23 of 59 Page 24 of 59 Page 25 of 59 Page 26 of 59 Page 27 of 59 Page 28 of 59 Page 29 of 59 Page 30 of 59 Page 31 of 59 Page 32 of 59 Page 33 of 59 Page 34 of 59 Page 35 of 59 Page 36 of 59 Page 37 of 59 Page 38 of 59 Page 39 of 59 Page 40 of 59 Page 41 of 59 Page 42 of 59 Page 43 of 59 Page 44 of 59 Page 45 of 59 Page 46 of 59 Page 47 of 59 Page 48 of 59 Page 49 of 59 Page 50 of 59 Page 51 of 59 Page 52 of 59 Page 53 of 59 Page 54 of 59 Page 55 of 59 Page 56 of 59 Page 57 of 59 Page 58 of 59 Page 59 of 59 JULY 22, 2015INVESTMENT POLICY FISCAL YEAR 2015-16 FINANCE DEPARTMENT OBJECTIVE •Goal 2 - Cultivate Sources, Other than Utility Rates, for Cost Recovery and Project Funding – Objective 4 - Enhance yields on cash reserves by updating District investment Policy and through diversification of investment portfolio. Submit policy for California Municipal Treasurers Association certificate. 2 INVESTMENT ACTIVITY OBJECTIVES •Safety - Foremost of the objectives, seeks to ensure the preservation of capital in the overall portfolio. Requires diversification so losses on one security do not exceed earnings on remainder of portfolio •Liquidity - Requires that the portfolio remain liquid enough to meet reasonably anticipated operating requirements. •Yield – Portfolio should be designed to obtain the best yields or returns, but yield should remain secondary to Safety and Liquidity. 3 CURRENT POLICY •EVWD Bonds •Other California local agency bonds •US Treasury Bills, Notes, Bonds •US Agencies •California Debt Obligations •Negotiable Certificates of Deposit •Mutual Funds •Collateralized Bank Deposits •LAIF 4 CURRENT INVESTMENT ALLOCATION $13,117,520 $1,311,516 $3,888,402 $745,096 $1,958,776 $1,097,994 LAIF US Treasuries-CBB US Agencies-CBB Bank Deposits Mutual Fds-Sinking Mutual Fds-Proceeds EXAMPLE: AMORTIZED COST •$500,000, 7 yr. T-Note, 2.75% •Matures 11/30/16 •Purchased 11/23/12 for $544,375 •Annually – Revenue $ 13,750 – Amortization Cost (11,100) – Net 2,650 – Yield .53% 6 PROPOSED ADDED INVESTMENT TYPES 7 •MUNICIPAL BONDS – OTHER STATES •Registered note or bond issued by one of 49 state, or a department, board, agency, or authority of a state. May include bonds payable solely from revenue. •COMMERCIAL PAPER •Unsecured or asset backed short term security (less that 270 days) with highest possible rating from an NRSRO (A1/P1/F1). •MEDIUM TERM NOTES •Debt instruments of corporations or banks organized and operating in the US. Must be at least AA; limited to 5 years and 30% of portfolio •LOCAL GOVERNMENT INVESTMENT POOLS •Shares of beneficial interest in a pool created by Joint Powers Agreement to invest in obligations authorized by the CGC. •PLACEMENT SERVICE DEPOSITS •Non-negotiable CDs purchased from a network of financial institutions through a private entity. CD balances, principal plus interest, are kept below the FDIC insurance limit Credit Rating Requirements Investment Type CA Minimum Credit Rating Requirement EVWD Minimum Credit Rating Requirement Municipals – Other States N/A N/A Commercial Paper Corp Comm Paper ‘ A-1’ Corp Other Debt ‘A’ Corp Comm Paper ‘A-1’ Corp. Other Debt ‘A’ Medium Term Notes A AA Local Government Investment Pools Investment Advisor • Registered with SEC • 5 yrs experience • $500 million under mgt AA Placement Service Deposits Fully FDIC insured Fully FDIC insured 8 NEXT STEPS •Cash Flow Projections •Establish Broker Relationship – Proof of Financial Industry Regulatory Authority (FINRA) Certification – Proof of State of California Registration – Completed Broker / Dealer questionnaire – Audited Financial Statements – Certification of having read the District’s Investment policy and depository contracts 9 RECOMMENDATION •Adopt Resolution 2015.08 establishing and Investment Policy for public funds for the East Valley Water District 2015-16 fiscal year. •Agency Ideal IV Fully Understand Challenges to Cultivate Effective Solutions –IV (C)Pursue alternative funding sources 10